In the foreword to its World Economic Outlook published in October, the International Monetary Fund (IMF) says that over the past seven years, the global economy has experienced an “exceptional sequence of events”. This does seem something of an understatement.
“The pandemic and the ensuing disruptions to global supply chains; the wars in Ukraine and the Middle East, with the consequent sharp increases in the prices of energy and other commodities; and significant changes in trade barriers and trading relations have tested the resilience of households, firms, financial markets, and governments,” the IMF says.
“Individually, each of these major developments would have been considered unlikely. Their confluence over such a short period of time is even more extraordinary.”
Despite this, the report says the global economy has remained resilient. To illustrate this, the IMF says it expects global economic growth of 3.1% this year and 3.4% in 2027.
So far, so good, one might be forgiven for thinking. But the IMF goes on to state that this global resilience is “under strain”. This is due to energy supplies “dwindling” and high levels of debt acting as a restraint on governments.
It adds that global headline inflation is expected to rise to 4.7% in 2026 before dropping to 4.1% in 2027.
Closer to home, the UK is clearly not immune to these trends. The report predicts that the UK will record economic growth of 1.3% in 2026, but this will drop to 1.2% in 2027 “as higher energy prices and long-term interest rates weigh on consumption and investment”.
Summarising the steps that the IMF believes are needed to shore up the global economy and restore resilience to the system, the foreword says: “The task ahead is to move from coping to rebuilding: rebuilding supply-side resilience, restoring fiscal space, lifting growth potential, and ensuring that the next decade is defined by growth and shared prosperity.”
Easier said than done, perhaps. But the IMF says that “international cooperation remains indispensable” given the cross-border nature of the economic shocks.
And, although not included in the IMF’s list of economic actors that have had their resilience tested, charities across the UK know the impact of these economic issues and how resilience is being stretched. Working together and sharing knowledge will also help the sector through these tough times.
Tristan Blythe, Editor, Charity Finance
